Wealthy investors and asset managers wield a lot of power over the major companies whose stock they own or control. Every year, shareholder advocacy groups hope to exert that power for good by filing shareholder resolutions — 500-word proposals that might ask companies to voluntarily reduce their greenhouse gas emissions, or to disclose more information on their resource use.
Shareholders typically vote on resolutions between April and June during a period known as “proxy season,” named after the proxy statements that companies distribute to investors ahead of their annual shareholder meetings. These votes aren’t binding, but they can influence companies’ decisions and generate press around a particular issue.
This year, activist investors are notching wins even before the beginning of proxy season. Shareholder advocacy groups have already extracted a handful of plastics-related concessions from major companies — including the entertainment behemoth Disney, the food processing giant Hormel, and Choice Hotels, one of the largest hotel chains in the world. The companies’ new commitments include reporting on and reducing the amount of plastics they use in their packaging, as well as more closely monitoring hazardous plastic additives.
Activist investment firms like Green Century Capital Management — which manages over $1 billion in assets — must make a business case for environmental action. Douglass Guernsey, a shareholder advocate at Green Century Capital Management who helped negotiate the agreements with Disney and Choice Hotels, said the new commitments show that companies are waking up to the threat that single-use plastics pose to their bottom line. Between the prospect of more stringent state regulations, new lawsuits against plastic producers, and a global plastics treaty being negotiated by the United Nations, plastics are facing some potentially severe regulatory and reputational prospects over the coming years.
“It’s unnerving investors,” Guernsey said, and the scale of the problem is “just starting to dawn on corporate managers.”
The companies’ pledges also shed light on the shareholder advocacy strategy, which is not necessarily to sway companies through voting on shareholder resolutions, but to use the prospect of a vote as a negotiating tool. According to Guernsey, shareholder advocates almost always prefer to reach an agreement with companies through dialogue — they only file a resolution if they feel that it’s needed to keep the conversation going. In some cases, after a resolution is filed, companies agree to make some kind of commitment in exchange for the resolution’s withdrawal.
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That’s essentially what happened with Hormel. A nonprofit shareholder advocacy organization called As You Sow started talking to the company last fall, asking them to take more responsibility for plastic packaging after their products are sold to customers. As You Sow organizes investors and asset managers around a range of social and environmental issues, and it persuaded investors holding nearly $2 trillion in shares to vote for the 48 resolutions it introduced in 2023. Kelly McBee, As You Sow’s circular economy manager, said she had “productive conversations” with Hormel, but she still wanted to see more support for laws that make companies financially responsible for the trash they produce (known as “extended producer responsibility,” or EPR, laws), as well as more investment in plastic collection and recycling infrastructure.
“That’s when we moved into the shareholder resolution phase,” McBee said. After As You Sow’s filing, Hormel came back to the table offering some additional plastics commitments, including a pledge to reduce its cumulative packaging use by 10 million pounds by 2030. It also agreed to form an industry working group to advance policies that make packaging more recyclable or reusable, and to publish by the end of 2024 a report on ways for Hormel to become a more circular company, meaning one that minimizes waste. As You Sow withdrew its shareholder resolution in response to the new commitments.
“Hormel was pretty great to work with, they seemed genuinely motivated,” McBee said. Back in 2021, As You Sow had given the company an F grade on its plastic pollution scorecard, in part due to a lack of transparency around its plastics use and poor support for plastic waste collection and management.
The commitments secured by Green Century followed a similar arc. After talks with Disney and Choice Hotels, Green Century filed shareholder resolutions and then withdrew them in exchange for corporate pledges to measure, report, and set new targets for reducing their plastics use.
Disney had already been “ahead of the curve,” Guernsey said, with commitments to eliminate single-use plastics on its cruise ships by 2025 and to achieve zero-waste in its theme parks by 2030. But more measurement and reporting will increase transparency around the company’s progress. Choice Hotels had already committed to phase out single-use polystyrene foam packaging by the end of 2023 and transition to bulk shampoo and other amenities by 2025. But an organization-wide plastics inventory will now allow the chain to set its first overall reduction goal by early next year.
Other commitments recently secured by Green Century and other investors include one from the retail chain Costco, which agreed in October to report plastics use across its Kirkland-branded products, and another from the beverage conglomerate Keurig Dr. Pepper, which agreed in January to restrict its suppliers from using certain bisphenols — a family of plastic additives linked to hormone disruption. Green Century is planning to unveil more plastic commitments — largely related to increasing disclosure and reducing plastics use — from about a dozen more companies in the coming weeks. Meanwhile, As You Sow has filed plastic-related shareholder resolutions at at least 14 other companies.
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Not all negotiations between companies and shareholder advocates result in a mutual agreement, and resolutions that go to a vote can’t force a company’s hand. A 2023 resolution asking Amazon to reduce its plastic packaging, for instance, was largely ignored by the company despite receiving support from nearly half of its shareholders. “All votes on shareholder proposals are nonbinding,” McBee explained. “So even if 100 percent of shareholders vote on something, the company doesn’t have to take that action.”
Votes can still have indirect influence, though. If a company ignores the will of its shareholders, McBee said, they can sell their shares, reducing its valuation and access to capital. Companies that disregard shareholder resolutions might also make potential investors think twice about sinking their money into the company, or perhaps inspire lawmakers to write legislation forcing companies to take steps they won’t take voluntarily.
Still, many advocates question the power of shareholders to effect systemic change. Even after their most recent pledges, companies like Disney and Hormel will likely continue to be large plastic polluters — not to mention their other environmental impacts, like the emissions associated with Disney’s fossil fuel-powered cruise ships and Hormel’s industrial meat products. Some environmental groups pressure major investors to sell their shares in polluting companies rather than to try to change them from within. Others favor advocating for more stringent government regulations.
“[R]elying on shareholders to make corporations more accountable and socially responsible is misguided,” wrote Warren Staples, a former lecturer in social procurement at the University of Melbourne, and Andrew Linden, an corporate governance researcher at RMIT University, in a 2019 essay. “There are far more direct and systemically effective measures available to do that.”
Choice Hotels, Costco, Disney, Hormel, and Keurig Dr. Pepper did not respond to Grist’s request for comment.
Even shareholder advocates acknowledge their strategy’s limitations, including on plastics. Globally, two garbage trucks’ worth of plastic enter the ocean every minute, and plastics and petrochemical companies are planning to make even more of the material over the coming decades. To rein in the plastics problem, Guernsey said, “overall regulation is going to be important” — especially standardized requirements for companies to disclose and report their plastics use, as well as more EPR legislation and bans on particular types of plastic.
